Investigating the effects of institutional distance and experience on acquisition performance across emerging markets

Abstract

Purpose

This study combines institutional and organizational learning perspectives to investigate the impact of institutional distance and institution-specific cross-border acquisition experience in emerging markets on cross-border acquisition performance.

Design/methodology/approach

The sample consists of 874 transactions involving targets across 37 emerging markets by 484 different acquirers from 45 developed and emerging markets. The authors decompose institutional distance and acquisition experience along their cultural, administrative, geographic and economic dimensions.

Findings

The authors find that cultural, administrative and geographic distance have a negative impact on acquisition performance. In contrast, economic distance does not appear detrimental to acquisition performance across markets. The study provides evidence that a company may apply learnings from previous transactions in similar cultural and economic emerging market environments to elevate the likelihood of a successful acquisition.

Originality/value

This study offers a more fine-grained perspective of the distance concept by decomposing the concepts of institutional distance and acquisition experience along different institutional dimensions. The research across 37 emerging markets sheds light on which of the similarities and differences between these markets are relevant concerning acquisition experience and performance.

Citation

Goetz, M.A. and Morschett, D. (2023), "Investigating the effects of institutional distance and experience on acquisition performance across emerging markets", International Journal of Emerging Markets, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJOEM-02-2022-0225